* Newspaper company to have own board and management team
* Broadcast company consists of TV stations, real estate
* Tribune expects spinoff to happen within 12 months
By Jennifer Saba
July 10 Tribune Co will separate its
publishing business from its more-profitable broadcast division,
it said on Wednesday, following the path taken by Time Warner
Inc and News Corp.
Media companies have been shedding their print assets to
allow a greater focus on their faster-growing broadcast
Tribune plans a tax-free spinoff of its eight newspapers,
which include the Los Angeles Times and Chicago Tribune. The new
company, Tribune Publishing Co, will have its own board and
senior management team.
The broadcast company, which will retain the Tribune name,
will include its 42 local TV stations, superstation WGN America,
an equity stake in the TV Food Network, and digital and real
"Each will be a stronger company when separated from the
other," Tribune Chief Executive Officer Peter Liguori wrote in
memo to employees. "(The spinoff) will also allow us to maintain
flexibility as we continue considering all our strategic
alternatives for maximizing shareholder value."
The move marks another twist in the ownership of Tribune,
which started in 1847 with the publication of the Chicago
Tribune. Last year it emerged from a four-year bankruptcy after
real estate developer Sam Zell acquired Tribune and saddled it
with enormous debt just as the newspaper industry hit a
Newspapers have faced unprecedented challenges in recent
years as advertisers flee the medium and consumers ditch print
subscriptions in favor digital access for their smartphones and
Earlier this year, Tribune said it was looking at selling
the newspapers after it retained Evercore Partners Inc
Tribune had not officially begun the sale process for the
newspapers, a person familiar with the company told Reuters last
A separate newspaper company could be easier to sell since
the split would resolve questions around real estate and digital
assets like CareerBuilder and Classified Ventures.
TREND TO SPIN
The move to spin off publishing assets has been a popular
one. Time Warner is in the process of spinning off its
Time Inc publishing division after a potential sale to Meredith
Corp fell apart.
News Corp, which now consists of newspapers like
the Wall Street Journal, publisher HarperCollins and pay-TV and
digital assets in Australia, started trading as a separate
company on July 1.
"In every case, the management is looking at the comparative
growth rate of the publishing assets versus the broadcast
assets, said Alan Mutter, a managing director at media and
technology consulting firm Tapit Partners and author of the blog
"Reflections of a Newsosaur."
"The future for publishing is unclear at best, and at worst,
the ongoing deterioration may continue."
Tribune has already turned its attention to television. A
longtime broadcast executive from Fox and Discovery
Communications Inc, Liguori orchestrated Tribune's
blockbuster acquisition of Local TV for $2.3 billion just last
week. [ID: nL3N0F72DX].
In 2012, Tribune's publishing assets accounted for
two-thirds of the company's total revenue of $3.1 billion but
only 22 percent of total operating profit of $396.4 million.
Tribune expects to complete the separation over the next 12
months, and management will present detailed plans for the board
to consider. Each company would have revenue in excess of $1
billion, Tribune said.